Mortgage insurance in Canada is a type of insurance that is designed to protect mortgage lenders in the event that a borrower defaults on their mortgage payments. It is mandatory for homebuyers in Canada who are putting less than 20% down payment on their home purchase to obtain mortgage insurance.
The mortgage insurance is provided by three mortgage insurance providers in Canada – Canada Mortgage and Housing Corporation (CMHC), Genworth Canada, and Canada Guaranty. The insurance premium is typically added to the mortgage payments and is calculated as a percentage of the total mortgage amount.
Mortgage insurance in Canada is different from homeowner’s insurance, which protects the homeowner’s property and belongings. Instead, it provides protection for the lender, allowing them to approve a mortgage for a borrower who might not otherwise qualify due to a high loan-to-value ratio. This type of insurance is often required to be in place before a mortgage can be approved. Working with an experienced real estate agent and a trusted mortgage lender can make the process smoother and less stressful.